High Court Ruling: How to Win Pols and Influence Voters

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For a while, it just seemed there was no limit to what wealthy Republicans and Democrats could spend to influence the outcome of congressional races. But that was before the Supreme Court on Wednesday blew the lid off the limits that individuals can contribute to political contests and causes.

It has been four years since the High Court ruled that the First Amendment prohibits the government from restricting political independent expenditures by corporations, associations or labor unions. That decision paved the way for creation of conservative super PACs like American Crossroads and liberal super PACs like Senate Majority PAC and Democratic Priorities USA that poured hundreds of millions of dollars into presidential and congressional campaigns.

Now the court has ruled that federal election law cannot constitutionally limit the amount that any one donor can give to candidates or parties in any two-year election cycle.

It is a decision that will almost certainly lead to another uptick in campaign spending. This time it will involve so-called “hard money” that is directly poured into campaign operations instead of the “soft money” that can only be used by independent groups to try to influence the outcome of elections.

This new source of money may be as hard to track as SuperPAC funds as it is funneled, filtered and even laundered by the two political parties.

“This effectively means we will now invite million dollar donors into the hard money system for really the first time post the Watergate scandal,” said Sheila Krumholz, executive director of the Center for Responsive Politics, a campaign finance watchdog. “It’s really mucking around with the hard money limits for the first time, which is much closer to the power center – the candidates themselves. And it will be a boon to the political leadership because they will be able to leverage big money for their candidates.”

In a 5 to 4 decision, the Supreme Court struck down limits in federal law on the overall campaign contributions that the biggest individual donors may make to candidates, political parties and political action committees.

Chief Justice John Roberts and four other conservative justices held that anyone has the right to give the legal maximum to candidates for Congress and president, as well as to parties and PACs, without having to worry about whether they will violate the law by bumping up against a limit on all contributions. That limit was set at $123,200 for 2013 and 2014.

The ruling keeps in place limits on individual contributions to candidates for president or Congress. Right now, a campaign committee cannot accept more than $2,600 from any one donor during the election cycle.

But there’s a catch.

The controversial ruling invites creative accounting and bookkeeping strategies by wealthy donors and party officials and strategists in order to funnel big contributions through new super fundraising committees - then on to a network of separate entities that each could contribute the maximum to favored candidates. So instead of contributing a mere $2,600 a year to candidate X, an individual could indirectly fund one candidate in the millions.

The 2010 “Citizens United” court ruling spawned a raft of “Super PACs” that could raise and spend unlimited sums. The largest of those included Restore our Future, which backed Republican presidential nominee Mitt Romney; American Crossroads, which was co-founded by Republican operative Karl Rove; and Democratic Priorities USA Action, which was set up to reelect President Obama.

Yesterday’s ruling in McCutcheon v the Federal Election Commission, by contrast, will only impact contributions that go directly to a congressional or presidential candidate’s campaign organization.

While many campaigns will continue to rely heavily on smaller individual contributions for the bulk of their operating funds, “This just puts more clout and power into the pockets of a very elite set of Americans who are already quite empowered in American politics,” according to Krumholz.

The ruling has drawn mostly jubilant praise from Republicans and cautious or negative responses from Democrats and campaign finance watchdog groups. While both parties are certain to take advantage of yesterday’s court ruling, Democrats are already feeling the heat of conservative Super PACs this year and must worry about another avenue of special interest money being used against them. The top Republican Super PACS outraised the top Democratic Super PACS by more than 2 to 1 during the 2012 campaign, according to a Wall Street Journal analysis.

This year, the conservative political advocacy group founded by libertarian industrialists Charles and David Koch already has spent more than $25 million on TV and radio ads in Senate and House races this year, and will be sure to spend a lot more. Democrat Tom Steyer, a billionaire and retired West Coast investor, plans to spend as much as $100 million during the 2014 election, seeking to pressure federal and state officials to enact climate change measures.

With this new ruling, Democrats clearly appear nervous about the impact that conservative Super PACS may have on the outcome of the House and Senate races this fall.

Rep. Steve Israel of New York, chairman of the Democratic Congressional Campaign Committee, told reporters on Wednesday morning – just before the court decision – that “the one thing that makes me toss and turn at night” is the growing influence of “Super PACs” and the Republicans’ advantage in raising money for those organizations.

“It’s going to have to be all hands on deck to withstand this onslaught from the Super PACs,” Israel said in assessing his party’s long-shot prospects for regaining control of the House.

House Speaker John Boehner (R-OH) wasted no time in praising the ruling. “What I think this means is, freedom of speech is being upheld,” Boehner told reporters at the Capitol. “You all have the freedom to write what you want to write, donors ought to have the freedom to give what they want to give.”

Senate Minority Leader Mitch McConnell (R-KY), who has been deeply involved in campaign finance issues, also celebrated the decision.

“The Supreme Court has once again reminded Congress that Americans have a Constitutional First Amendment right to speak and associate with political candidates and parties of their choice,” McConnell said in a statement

Dissenting from the bench, Justice Stephen G. Breyer called the court ruling a blow to the First Amendment and American democracy. “If the court in Citizens United opened a door,” he said, “today’s decision may well open a floodgate.”

In his dissent, Breyer provides a virtual roadmap to violating the intent of the cap on individual contributions – one that is hardly less complex than the web of political action committees that currently exists.

Breyer posits the creation of a Joint Party Committees by each of the main political parties. For sake of argument, he names one committee the “Smith Victory Committee,” and assumes that its members include each of the national party committees, the state committees, and the individual candidates’ campaign committees. By adding up the total allowable contribution to each of those entities, Breyer determines, a person – whom he names Rich Donor – could write a check for $3.6 million to the Joint committee. So long as the Joint Committee then transfers no more than the specified limit to each of the committees under the umbrella, the donor has not run afoul of campaign finance law.

The problem, Breyer says, is that the law will also allow the committees and individual candidates that make up the Joint Party Committee to turn around and write checks to candidate Smith.

Breyer writes, “For his primary and general elections combined, they can write checks of up to $4,000 (from each candidate’s authorized campaign committee) and $10,000 (from each state and national committee). This yields a potential $1,872,000 (from candidates) plus $530,000 (from party committees)."

Thus, the law permits the candidates and party entities to redirect $2.37 million of Rich Donor’s $3.6 million check to Candidate Smith. It also permits state and national committees to contribute to Smith’s general election campaign through making coordinated expenditures—in amounts that range from $46,600 to $2.68 million for a general election (depending upon the size of Smith’s state and whether he is running for a House or Senate seat).

The upshot is that Candidate Smith can receive at least $2.37 million and possibly the full $3.6 million contributed by Rich Donor to the Smith Victory Committee, even though the funds must first be divided up among the constituent units before they can be rerouted to Smith.”

Further, he points out, it would be possible for any and all candidates for office to create such committees. The ruling, Breyer determined, “creates a loophole measured in the millions.”

Not all Republicans were celebrating the ruling. Sen. John McCain of Arizona, who co-authored a 2000 ban on unrestricted “soft” money donations to the parties, called the opinion “tragic.” Asked about the ruling, the Arizona Republican replied, “What can I say? I think it’s really the worst. I think it’s a terrible decision, but I’m not surprised given their decision in Citizens United,” according to Roll Call.

The Fiscal Times’ Rob Garver contributed to this report. This article was updated on April 3, 2014. An earlier version incorrectly referred to Americans for Prosperity as a "Super Pac" instead of a political advocacy group.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.